Renewed upward pressure on global oil prices has revived calls for the Philippine government to suspend excise taxes on petroleum products, though experts remain divided on the measure's effectiveness.
Fuel retailers are expected to raise diesel prices by as much as P10.50 per liter and gasoline by as much as P4 per liter this week.
A senior adviser at Reyes Tacandong & Co. said he would not immediately recommend suspending the fuel excise tax, arguing that targeted interventions better ease the burden on vulnerable sectors while preserving government revenues.
He urged the government to expand fuel subsidies for public transport, farmers, and fisherfolk, provide cash assistance to low-income households, and accelerate energy conservation measures.
He emphasized that reducing fuel and power consumption is the quickest and most effective response to an oil price shock, rather than merely absorbing higher prices.
Excise tax suspension should remain a contingency measure only if oil prices stay elevated for a prolonged period and threaten inflation, growth, and consumer welfare, he said.
The Philippines, a net crude oil importer, has been under a year-long energy emergency since late March as the Middle East crisis threatens fuel supply.
Under Republic Act No. 12316, the President may suspend or reduce excise taxes on petroleum products, a move estimated to lower pump prices by P6 per liter for diesel and P10 per liter for gasoline.
President Ferdinand R. Marcos, Jr. suspended excise tax on liquefied petroleum gas and kerosene for three months starting April 13, cutting LPG prices by P3.36 per kilo and kerosene by P5.60 per liter.
The suspension was lifted on July 8 after the average Dubai crude price dropped below the $80 per barrel threshold.
The president of Jetti Petroleum, Inc. said a possible suspension may again be necessary to cushion further increases on socially sensitive products.
Based on regional benchmark trading, diesel prices are projected to rise by P10 to P10.50 per liter this week, with gasoline up P3.50 to P4 per liter.
The increases could push both fuels beyond P100 per liter, well above prewar levels of around P50 to P60 per liter.
The breakdown of a US-Iran truce and tanker attacks in the Strait of Hormuz revived concerns about Middle East shipments, according to the Jetti Petroleum president.
He noted that gasoline prices strengthened as global stock balances remain tight, with inventories falling amid firm demand.
He added that Iran has directed its Houthi allies in Yemen to shut the Red Sea export route should the US attack its power infrastructure.
The senior vice-president and chief operating officer of Top Line Business Development Corp. said it is too early to call for excise tax suspension despite Middle East tensions.
She said that if increases become sustained and significantly impact consumers, a temporary suspension may be considered to ease the burden on motorists and households.
The co-convenor of the Center for Energy Research and Policy said fuel price volatility is not the core issue facing the country.
He said the Philippines remains vulnerable to external supply shocks due to heavy import dependence, lack of automatic price controls, and absence of a Strategic Petroleum Reserve.
Building those buffers is what protects consumers from the next shock, not only the current one, he added.
The government is laying down plans to build a strategic petroleum reserve program, including new stockpiling facilities.
